Ranking Trump's Stock Market

[Oneuli]

As further context for how stocks are doing under Trump, here's the annualized real rate of increase for the S&P 500 for each president.

Note, the data starts 1/3/1950, so we're only working with part of Truman's presidency. Also note, there's no inflation data for November of this year available yet, so I just projected forward the average inflation increase for Trump's time one additional month to account for November.

Clinton 12.24%
Obama 11.85%
Truman 11.27%
Eisenhower 9.37%
Bush41 6.43%
Trump 6.10%
Reagan 5.77%
Johnson 4.57%
Kennedy 4.26%
Ford 3.29%
Carter -3.68%
Bush43 -8.37%
Nixon -9.66%

So, as ugly as this market looks, it's actually just mediocre. And considering that the last six Republican-led eras have spanned from mediocre to harrowing, we should probably be happy with mediocre.

[Oneuli]

As further context for how stocks are doing under Trump, here's the annualized real rate of increase for the S&P 500 for each president.

Note, the data starts 1/3/1950, so we're only working with part of Truman's presidency. Also note, there's no inflation data for November of this year available yet, so I just projected forward the average inflation increase for Trump's time one additional month to account for November.

Clinton 12.24%
Obama 11.85%
Truman 11.27%
Eisenhower 9.37%
Bush41 6.43%
Trump 6.10%
Reagan 5.77%
Johnson 4.57%
Kennedy 4.26%
Ford 3.29%
Carter -3.68%
Bush43 -8.37%
Nixon -9.66%

So, as ugly as this market looks, it's actually just mediocre. And considering that the last six Republican-led eras have spanned from mediocre to harrowing, we should probably be happy with mediocre.

If you want to check my data, you can calculate it with these two sources:

https://fred.stlouisfed.org/series/CPIAUCSL
https://finance.yahoo.com/quote/%5EGSPC/history/

[cawacko]

I'll only speak for myself here but I don't really care how they rank. Contrary to what Trump thinks the Dow isn't a scorecard for a President's policies. And there are many outside variables involved in viewing just a two year window.

[Controlled Opposition]

Presidents are there to take credit or blame for things they have little or nothing to do with.

[Jack]

I don't think there is a direct correlation between Presidents and the Stock Market.

As further context for how stocks are doing under Trump, here's the annualized real rate of increase for the S&P 500 for each president.

Note, the data starts 1/3/1950, so we're only working with part of Truman's presidency. Also note, there's no inflation data for November of this year available yet, so I just projected forward the average inflation increase for Trump's time one additional month to account for November.

Clinton 12.24%
Obama 11.85%
Truman 11.27%
Eisenhower 9.37%
Bush41 6.43%
Trump 6.10%
Reagan 5.77%
Johnson 4.57%
Kennedy 4.26%
Ford 3.29%
Carter -3.68%
Bush43 -8.37%
Nixon -9.66%

So, as ugly as this market looks, it's actually just mediocre. And considering that the last six Republican-led eras have spanned from mediocre to harrowing, we should probably be happy with mediocre.

[Oneuli]

I'll only speak for myself here but I don't really care how they rank. Contrary to what Trump thinks the Dow isn't a scorecard for a President's policies. And there are many outside variables involved in viewing just a two year window.

To be clear, I didn't use the DOW. I used the S&P 500.

I agree, of course, that stock markets are only one of a large number of stats we should be looking at. For example, we could look at the way the growth of federal debt has accelerated recently. In the last twelve months alone, we've added about $1,305 billion in debt. There are also poverty rates, household incomes, job creation rates, private debt levels, educational test scores, life expectancies, the percentage of Americans covered by health insurance, infant mortality rates, violence crime rates, incarceration rates, and so on. The problem is a lot of those are either well-known to be trailing indicators (e.g., poverty), or there are long delays in official stats being published, or both, so it's hard to get a forward-looking measure. Most people regard the stock market as a leading indicator, so it has value in that sense.

[Bourbon]

Donald Trump's Tweets and his Big Fucking Mouth DO have an Impact on The Market ...

[Oneuli]

I don't think there is a direct correlation between Presidents and the Stock Market.

Here's one thing that troubles me about the state of the political debate: people are content to simply state hypotheses, without making any attempt to test them. The idea that there isn't a correlation between presidents and the stock market is a hypothesis. Why not test it?

One test of that hypothesis would be to average out the rates of stock growth by which party controls the presidency. If the president doesn't matter much, we'd expect a fairly random distribution of stock market performance without regard to the overriding political philosophy of the man at the top. Even if one group of presidents were following one set of political ideas (slash taxes for the rich, reduce regulations for business, spend extravagantly on the military), and one was following a contrary set of political ideas (enhance social programs for the masses and regulations meant to protect them), we would expect to find no real difference between the two blocks of presidencies, once enough time had passed (e.g., 50 or 75 years). By comparison, if the president does matter, we'd expect a significant gap between years with a Democratic president and years with a Republican one.

So, how does that hypothesis look in light of the history? Well, if you do a weighted average of the figures above (weighted based on time -- e.g., Bush43 counts twice as much as Bush41, since he was in office twice as long), here's what you get:

The average growth with a Democrat in the presidency is 7.99% per year. The average with a Republican in the presidency is 1.50% per year. Does that look like a lack of correlation? It doesn't to me.

I suppose if I wanted to spend more time to figure out how to pro-rate inflation by day (it's reported by month), I could recalculate by testing the increase every single trading day since 1950, and calculate the exact correlation. However, given the large data set and the very large gap between 7.99% and 1.50%, I'm almost certain it would prove a statistically significant correlation between the party of the presidency and the real performance of stocks.

[Jack]

I appreciate your interest in this.
If the President was more like a King or Dictator, you may have a valid argument, but that isn't the case.
There's too many factors involved: Who controls the Congress? (You saw how Republicans stymied Obama on everything he tried to do). An independent Federal Reserve. The Business Cycle. World Events. Etc.
Historically over the last 200 years, the Stock Market increases at about 8% a year (meaning you can double your money in 10 years through the use of compounding).

Oneuli: "However, given the large data set and the very large gap between 7.99% and 1.50%, I'm almost certain it would prove a statistically significant correlation between the party of the presidency and the real performance of stocks."
Jack: If what you say is true, why do most of the Ownership Class vote for Republicans while the Worker Drone Class vote for Democrats?

Here's one thing that troubles me about the state of the political debate: people are content to simply state hypotheses, without making any attempt to test them. The idea that there isn't a correlation between presidents and the stock market is a hypothesis. Why not test it?

One test of that hypothesis would be to average out the rates of stock growth by which party controls the presidency. If the president doesn't matter much, we'd expect a fairly random distribution of stock market performance without regard to the overriding political philosophy of the man at the top. Even if one group of presidents were following one set of political ideas (slash taxes for the rich, reduce regulations for business, spend extravagantly on the military), and one was following a contrary set of political ideas (enhance social programs for the masses and regulations meant to protect them), we would expect to find no real difference between the two blocks of presidencies, once enough time had passed (e.g., 50 or 75 years). By comparison, if the president does matter, we'd expect a significant gap between years with a Democratic president and years with a Republican one.

So, how does that hypothesis look in light of the history? Well, if you do a weighted average of the figures above (weighted based on time -- e.g., Bush43 counts twice as much as Bush41, since he was in office twice as long), here's what you get:

The average growth with a Democrat in the presidency is 7.99% per year. The average with a Republican in the presidency is 1.50% per year. Does that look like a lack of correlation? It doesn't to me.

I suppose if I wanted to spend more time to figure out how to pro-rate inflation by day (it's reported by month), I could recalculate by testing the increase every single trading day since 1950, and calculate the exact correlation. However, given the large data set and the very large gap between 7.99% and 1.50%, I'm almost certain it would prove a statistically significant correlation between the party of the presidency and the real performance of stocks.

[cawacko]

Here's one thing that troubles me about the state of the political debate: people are content to simply state hypotheses, without making any attempt to test them. The idea that there isn't a correlation between presidents and the stock market is a hypothesis. Why not test it?

One test of that hypothesis would be to average out the rates of stock growth by which party controls the presidency. If the president doesn't matter much, we'd expect a fairly random distribution of stock market performance without regard to the overriding political philosophy of the man at the top. Even if one group of presidents were following one set of political ideas (slash taxes for the rich, reduce regulations for business, spend extravagantly on the military), and one was following a contrary set of political ideas (enhance social programs for the masses and regulations meant to protect them), we would expect to find no real difference between the two blocks of presidencies, once enough time had passed (e.g., 50 or 75 years). By comparison, if the president does matter, we'd expect a significant gap between years with a Democratic president and years with a Republican one.

So, how does that hypothesis look in light of the history? Well, if you do a weighted average of the figures above (weighted based on time -- e.g., Bush43 counts twice as much as Bush41, since he was in office twice as long), here's what you get:

The average growth with a Democrat in the presidency is 7.99% per year. The average with a Republican in the presidency is 1.50% per year. Does that look like a lack of correlation? It doesn't to me.

I suppose if I wanted to spend more time to figure out how to pro-rate inflation by day (it's reported by month), I could recalculate by testing the increase every single trading day since 1950, and calculate the exact correlation. However, given the large data set and the very large gap between 7.99% and 1.50%, I'm almost certain it would prove a statistically significant correlation between the party of the presidency and the real performance of stocks.

You're trying to show results and claim a correlation but it's pretty well established in economics that the President has far less of an effect on the stock market than people credit them with. And taking a two year window isn't a true story anyway because there are many outside variables that have an effect.

[Cypress]

As further context for how stocks are doing under Trump, here's the annualized real rate of increase for the S&P 500 for each president.

Note, the data starts 1/3/1950, so we're only working with part of Truman's presidency. Also note, there's no inflation data for November of this year available yet, so I just projected forward the average inflation increase for Trump's time one additional month to account for November.

Clinton 12.24%
Obama 11.85%
Truman 11.27%
Eisenhower 9.37%
Bush41 6.43%
Trump 6.10%
Reagan 5.77%
Johnson 4.57%
Kennedy 4.26%
Ford 3.29%
Carter -3.68%
Bush43 -8.37%
Nixon -9.66%

So, as ugly as this market looks, it's actually just mediocre. And considering that the last six Republican-led eras have spanned from mediocre to harrowing, we should probably be happy with mediocre.

There is literally a plethora of legitimate data and studies showing that - on balance, on average - over the last century, the stock market and the economy do better under Democratic administrations than Republican administrations. These sources have been posted routinely on this forum going back over a decade.

Those are the facts.

The only question is why do allegedly fiscally-minded and pro-business rightwingers in the modern era continue to vote for the GOP?

My theory? It was never about which policies were best for the economy. It was always about latent resentment towards "the darkies".

[cawacko]

There is literally a plethora of legitimate data and studies showing that - on balance, on average - over the last century, the stock market and the economy do better under Democratic administrations than Republican administrations. These sources have been posted routinely on this forum going back over a decade.

Those are the facts.

The only question is why do allegedly fiscally-minded and pro-business rightwingers in the modern era continue to vote for the GOP?

My theory? It was never about which policies were best for the economy. It was always about latent resentment towards "the darkies".

We saw the failure of Keynesianism in the '70's and its attempted revival under Obama but yeah, it's about "the darkies".

[Oneuli]

I appreciate your interest in this.
If the President was more like a King or Dictator, you may have a valid argument, but that isn't the case.

My argument doesn't depend at all on the president being like a king or dictator. In fact, if the president were like a king or dictator, it would be bizarre for me to even offer up my argument, since there wouldn't be any controversy about the fact the president played a controlling role in such things. The whole point of my argument is to tease out the impact of someone who ISN'T a king or dictator.

There's too many factors involved

When is that NOT the case when testing hypotheses? Other than in very simple physics experiments, we're always going to be wrestling with situations with multiple factors. For example, consider this hypothesis: regular exercise tends to result in longer lives. There are a million factors involved. What kind of exercises? What kind of people are doing the exercising? What about diet? What about access to medicine? Etc. But if you're dealing with a big enough data set, and it shows a pretty substantial difference in lifespan between those who exercise regularly and those who don't, that's going to be seen as supporting the hypothesis. People are, of course, welcome to offer other hypothesis to explain the data in some other manner (e.g., maybe rich people exercise more and it's the wealth that lets them live longer, and once you control for wealth, there's no difference). But step one is to start looking at the data, rather than being content simply to assert something as an opinion.

Who controls the Congress?

That's one of the benefits of the large data set. We've had Republican presidents with Republican congresses, and Democratic ones, and split ones, and the same with Democratic presidents. So, those factors should tend to even out. However, if you'd like to recrunch the numbers to break them down by political control of Congress and not just the presidency, we could take a look at what that's telling us.

Jack: If what you say is true, why do most of the Ownership Class vote for Republicans while the Worker Drone Class vote for Democrats?

Some of the ownership class are just dumb. I mean, remember, a large portion of wealth in America is inherited wealth, or wealth that was grown slowly from inherited wealth. Think of Trump as an example. He's basically running his grandfather's business.... and doing it poorly. There's no reason to expect a dim bulb like that would vote rationally. So, when we're talking about muddle-headed trust fund kids, it's not surprising to find they could vote against their own rational best interests. They could just hear the Democrats talking more about issues that help the "worker drones" and assume what's good for the workers must be bad for them.

I think another explanation is "relative wealth." Think of it this way: would you rather be someone in the top 1% of the population in 2018 Munich or, say, 200 CE Rome, or 1720 CE Paris, or 1850 CE Atlanta? In terms of absolute wealth, you'd be VASTLY better off choosing modern Munich, where you'll have access to health treatment, technologies, and other benefits that couldn't be had at ANY price in those other times and places. You'd live like a olden days king could only dream of living, in absolute terms.

Yet think of it in relative terms. A top 1% person in Munich today would be nothing special. He probably drives himself to work, microwaves a disappointing dinner for himself many nights, cleans his own home, etc. Even if he's fairly senior at work, even the most junior of people don't feel the need to call him "Mister," or to treat him with any particular deference. By comparison, in those other times and places, the top 1%-er really would "live like a king" within his own little kingdom. He'd have a small staff of domestic servants, if not a large staff of slaves, catering to his every need. He'd be able to lord it over the vast majority of those around him, dispensing or denying alms as he felt fit, basking in the adoration (or fear) of his underlings, etc. And he'd be important. He'd have great power, at least locally, without the need to care much what the "rabble" thought about governance, etc.

I think a lot of people will give up plenty of absolute wealth in favor of relative wealth. And Republican leadership tends to favor that. Even though they suck at creating absolute wealth for those at the top, they have a strong record for holding back those at the bottom or the middle, enhancing the relative wealth and power of the elite. If you're, say, looking to staff your Mar-a-lago resort with a bunch of underlings who spend their days kissing your ass because they're scared to death of crushing poverty if they lose their position, then a Republican economy, where most people operate with no safety net and the little people are kept in line by debt and fear, has a lot to offer. A Democratic economy, where it's hard to find good help and people know they have a decent safety net if they lose their job, really undermines the entitlement of the Lordlings.

[Oneuli]

There is literally a plethora of legitimate data and studies showing that - on balance, on average - over the last century, the stock market and the economy do better under Democratic administrations than Republican administrations. These sources have been posted routinely on this forum going back over a decade.

Those are the facts.

The only question is why do allegedly fiscally-minded and pro-business rightwingers in the modern era continue to vote for the GOP?

My theory? It was never about which policies were best for the economy. It was always about latent resentment towards "the darkies".

Could be. See my last post for a non-racial explanation of the same paradox.

[Oneuli]

You're trying to show results and claim a correlation

The correlation is clear and undeniable. The only question is what is causing that correlation.

but it's pretty well established in economics that the President has far less of an effect on the stock market than people credit them with.

What makes you think that?

And taking a two year window isn't a true story anyway because there are many outside variables that have an effect.

Keep in mind, this isn't a two-year window that we're looking through, with the data I provided. It's 70 years. Yes, during those seventy years, there were many outside variables. For example, you could argue Carter's weak stock market (in real terms) wasn't his fault because he inherited an economy addicted to rising money supply, from Nixon and Ford, who had been content to kick the hyperinflation can down the road, such that when Carter finally addressed it by appointing an inflation hawk to head the Fed, the market paid a hard price that was the harsh medicine for a disease his predecessors had neglected. With any one period of a few short years, we can spin a tale like that. But when you're looking to 70 years (or a lot longer, if you use Dow data), that kind of "special pleading" starts to seem silly. At some point, we'd expect the "outside variables" to mostly cancel out, leaving us some ability to test the one variable we're trying to look at.